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Dimerix Limited


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Investment Memo: Dimerix (ASX:DXB) - LIVE

Opened: 01-Feb-2022

Shares Held at Open: 2,825,000

What does DXB do?

DXB is an early stage biotech research company that is developing an anti-inflammatory drug to treat respiratory and kidney diseases, with potential applications to treat COVID.

What is the macro theme?

Due to the pandemic, biotech and life sciences have been at the forefront of global decision making for investors, governments and ordinary consumers.

What was once an industry that was considered slow and niche is now rapidly evolving with innovation and technology.

Why did we invest in DXB?

Merchant Group Cornerstone Investment

We are following the lead of biotech experts at the Merchant Group, DXB is the first investment in their new early stage biotech fund and they have an excellent track record in the sector.

Phase III Clinical Trials on Rare Kidney Disease

DXB has commenced Phase III clinical trials on patients with a rare kidney disease called FSGS. This disease has 'orphan drug status', which means that DXB is eligible for accelerated approvals by drug regulators.

Clinical trials are a long process, so being eligible for accelerated approvals will save DXB time and money if the drug is proven to be successful at an interim stage.

The prize for a successful FSGS treatment is large, with DXB estimating the market to be more than $1B.

Covid-19 Side Bets

DXB has 2 near-term Covid-19 Phase III studies. If either of these studies are successful then we expect DXB’s share price to significantly re-rate.

Fully Funded

DXB has recently raised $24M at 20c, fully funding its clinical trials for FSGS through to interim results.

Read: Full Breakdown

What do we expect DXB to deliver in 2022?

Objective #1: Progress the Phase III Clinical Trial for Rare Kidney Disease (FSGS)

Over the next 12 months we want to see DXB get ethics approval in new jurisdictions and undertake recruitment for Part 1 of its Phase III clinical trial, which will include around 70 patients.


Phase III Study Design Complete

Study Design approved by the FDA

Ethics approvals complete 12/12 countries

Site Setup (assumed 80% complete)

First Patient Recruited

Patient Recruitment Updates

72 Patients Recruited

Patient Recruitment Updates

Interim Results Announced

Objective #2: Complete Phase III Clinical Trial to treat COVID-19 hospitalisations (CLARITY 2.0)

We want DXB to provide initial data on whether its treatment can improve respiratory function in hospitalised patients with COVID-19 in a clinical setting. With ethics approval granted in India and Australia, DXB will need to recruit patients and undertake analysis to evaluate the efficacy of its drug.

We want to first see an interim safety analysis of the first 80 patients before DXB continues recruitment for the full 600.

Objective #3: Complete Phase III Clinical Trial to treat pneumonia in patients with COVID-19 (REMAP CAP)

We want DXB to complete its Phase III clinical trial on ICU patients with pneumonia. It is well underway with recruitment and we will be expecting initial results in the first half of 2022. If DXB’s treatment is proven to be effective then we expect the technology to be transferable to other patients with pneumonia not just those caused by COVID-19.

Objective #4: Commence Clinical Trial for Diabetic Kidney [NEW - Updated 08/06/2022]


Clinical trial announced

Finalise clinical trial protocol

Ethics approval secured

Site set-up and initiation

First patient recruited

What could go wrong?

Early Stage Biotech Risk

There are some standard risks that are associated with early stage biotechs that are undertaking clinical research:

  • The drug is ineffective at treating the particular disease (determined by clinical trial results)
  • The drug is not considered safe for human consumption
  • The design of the trial is such that the regulatory body does not approve the drug
  • Patient recruitment is delayed
  • Ethics approval is delayed

Rare Disease Specific Risk

FSGS is a rare disease, this means it could take a long time to find and recruit patients into the clinical trial. To increase the pool of applicants for the clinical trial, DXB will need to recruit from around the globe. Therefore, DXB will need to to secure ethics approval in each new jurisdiction - this takes time and may cause delays.

Commercialisation Risk

Even if DXB’s treatment is successful it will still need to commercialise the drug, which can be difficult if a competitor drug is superior or the landscape of the disease changes (ie. a new strain of COVID-19 emerges that renders the drug ineffective).

What is our investment plan?

In early stage biotech investing, the lead up to initial phase III trial results is where investors can expect to see positive share price action as speculators enter the stock on expectation of a positive result, similar to what we usually see in our exploration stocks prior to long awaited drill results.

Like with all our early stage investments, we invest early and wait patiently for the share price catalyst event, at which point we will look to free carry prior to the result being announced, expecting to sell about 25% of our position on a share price re-rate, holding 75% into the release of results.

Prior to the phase 3 trial results for FSGS we will look to free carry our position if the share price re-rates off the back of either of the COVID treatment results.

General updates from DXB

Promising results from DXB’s R&D pipeline [04-Jul-2022]

Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 2,825,000 DXB shares at the time of writing this memo. S3 Consortium Pty Ltd has been engaged by DXB to share our commentary on the progress of our investment in DXB over time.

Investment Milestones for DXB

Initial Investment: @20c
🔲 Top Slice
🔲 Free Carry
🔲 Take Profit
🔲 Price increases 300% from initial entry
🔲 Price increases 500% from initial entry
🔲 Price increases 1000% from initial entry
🔲 12 Month Capital Gain Discount
🔲 Hold remaining Position for next 2+ years

Our Past Commentary on Dimerix

Date Title
17-Sep-2022 $ 0.135 Meeting management matters: In person catch ups with GAL, DXB and LRS
02-Sep-2022 $ Pre-result build up? The “big catalyst” in 2023
11-Jun-2022 $ 0.160 Why the market is tanking and what are we doing?
08-Jun-2022 $ Potential new use of DXB’s drug in US$2.5 Billion market
06-Jun-2022 $ 0.170 The need for significant investment in rare earths, other critical materials
01-Jun-2022 $ DXB Recruits First Patient, Gets FDA IND Approval
14-May-2022 $ 0.155 Small caps in a shocking market
30-Apr-2022 $ 0.155 US market swings drove a wild week on the ASX.
27-Apr-2022 $ DXB Actively Recruiting Patients Across the Globe, First Dosing Soon
05-Mar-2022 $ 0.195 Mainstream Media Catching on to the Commodities Supercycle
28-Feb-2022 $ DXB: Making Strong Progress on “Main Bet,” Side Bet #2 Paused
26-Feb-2022 $ 0.230 The War Begins, Cybersecurity, Food Security, Energy Independence and Precious Metals
12-Feb-2022 $ 0.250 Energy Transition Metals, Raw Materials, McKinsey, Supply and Demand Economics
05-Feb-2022 $ 0.250 The "Lesser Kown" Energy Transition Metals: Copper, Aluminium, Graphite, Helium, Rare Earths
01-Feb-2022 $ Earlier than Expected - DXB Gets First Regulatory Approval in Europe.
14-Jan-2022 $ 0.275 How do Fund Managers Invest in Small Cap Stocks?
18-Dec-2021 $ 0.235 Investing 101: Taking Stock of your Stocks and Diversification
27-Nov-2021 $ 0.245 New COVID strain, Santa Rally, Market Thoughts
30-Oct-2021 $ 0.265 The fallout from the VUL short attack explained
25-Oct-2021 $ 0.280 Lockdown lifts, Two stocks to watch: MNB and ONE
16-Oct-2021 $ 0.285 Mainstream media casts a big spotlight on Green Hydrogen
02-Oct-2021 $ 0.310 Evergrand, Gold and Traditional Energy
27-Sep-2021 $ 0.315 DXB announces approval for Phase III COVID-19 trials
25-Sep-2021 $ 0.315 Managing a market crash - lessons from March 2020
18-Sep-2021 $ 0.280 Why uranium stocks are soaring, one good movie recommendation
04-Sep-2021 $ 0.350 Annual Reports, Uranium and a Welcome to New Subscribers
28-Aug-2021 $ 0.325 Recap of the KNI IPO and share price run
21-Aug-2021 $ 0.315 Market fluctuations and portfolio news and quick takes
16-Aug-2021 $ 0.400 Introducing: Our Biotech Pick of the Year 2021

Investor Presentation

DXB’s latest Investor Presentation

ASX:DXB Sep 16, 2022

Investment Memo: DXB IM-2022
Objective 1: Progress the Phase III Clinical Trial for Rare Kidney Disease (FSGS)
Milestone 1: Patient Recruitment Updates

We were lucky enough to attend the latest Investor Presentation from Dimerix (ASX:DXB) and it gave us a great look at how our 2021 Biotech Pick of the Year is progressing.

We heard from DXB CEO and Managing Director Nina Webster as well as DXB Chief Medical Officer Ash Soman. This is DXB’s Chief Medical Officer Ash Soman presenting yesterday:

Here are our key takeaways from the presentation:

  • Patient recruitment update - DXB is more than 35% through recruitment and anticipates that it will be complete for the first 72 patients required for interim analysis by Q4 this year. This means that DXB is on track to deliver interim analysis results for Part 1 of the Phase 3 FSGS clinical trial in mid-2023
  • Significant market interest in kidney disease leading to major transactions - according to Garibaldi et al. (2021), there’s been “more change in the past 24 months than the past 24 years” for kidney disease treatments. The US government has made it a major priority because Medicare spends more than US$54BN on kidney treatment a year and this number is expected to grow. As a result, there have been a number of major transactions for kidney disease treatments in the last two years. We’re hoping DXB can ride these macro tailwinds and deliver great Phase 3 results.
  • If DXB can replicate Phase 2 results this would be a major success - the primary way of judging the efficacy of DXB’s treatment is through measuring the amount of protein in the urine of someone with FSGS. DXB’s Phase 2 trial already showed a 17% reduction across this metric. Something similar to that result would be very significant for DXB. We also learned that at each 10% reduction across this metric, this delivers tangible improvements in kidney function (see slide 38).
  • DXB’s treatment may be complementary to other FSGS treatments - there is only one other Phase 3 FSGS treatment at the moment, but since it works on a different aspect of FSGS it isn’t in direct competition with DXB’s FSGS treatment. In fact, both may wind up being used together as part of a cohesive approach to FSGS treatment.

With regards to patient recruitment, DXB’s progress is outlined in this slide:

We think the progress should pick up as DXB’s estimates indicate now that startup activities are largely finished (18 of the ~70 sites for the study are in Europe).

We found Nina to be an excellent ambassador for DXB’s treatments and we particularly enjoyed the clinical detail that DXB Chief Medical Officer Ash Soman added to the presentation.

For an easy to digest summary of all the progress that DXB has made since we initially Invested:

Click here to see our DXB Progress Tracker

Patient recruitment for COVID-19 study completed

ASX:DXB Aug 18, 2022 Announcement

Investment Memo: DXB IM-2022
Objective 1: Complete Phase III Clinical Trial to treat COVID-19 hospitalisations (CLARITY 2.0)

Dimerix (ASX:DXB) announced today that the CLARITY 2.0 led study of COVID-19 patients has concluded recruitment to allow this study to be analysed and reported.

DXB recruited 49 patients into the CLARITY 2.0 study and the safety and efficacy results of the clinical trial are currently being analysed and will be reported once available.

Now that recruitment has concluded, DXB can assess the current data for positive signs of proof of concept. If a positive signal is substantiated, DXB says it may then assess the next steps to progress towards the ultimate therapeutic outcome for these patients.

If DXB proves its CLARITY 2.0 treatment to be effective, we expect the treatment to be transferable to other patients with pneumonia and a wide range of respiratory diseases, not just those caused by COVID-19.

That would be a significant win for DXB and today’s announcement marks progress towards Objective #2 from our DXB Investment Memo.

What’s next for DXB? We are eagerly awaiting a patient recruitment update on what we view as the primary Phase 3 DXB study - the FSGS trial.

DXB Quarterly Reveals FSGS Patient Numbers

ASX:DXB Jul 28, 2022 Announcement

Investment Memo: DXB IM-2022
Objective 1: Progress the Phase III Clinical Trial for Rare Kidney Disease (FSGS)
Milestone 1: Patient Recruitment Updates

The Dimerix (ASX:DXB) quarterly report released yesterday morning gave us a good look at how the company is tracking, in particular with our “main bet,” the FSGS trial.

FSGS or focal segmental glomerulosclerosis is characterised by a dysfunction in the part of the kidney that filters blood.

11 patients (or 15% of the target 72 patients) have now been recruited to the company’s DMX-200 phase 3 trial for FSGS and 60% of the 75 sites for the trial are now activated.

This is the primary reason we are Invested in DXB.

DXB also said that it expects the remaining 40% of clinical trial sites to complete protocol training and activation in the next 4-6 weeks.

This marks the first update on patient recruitment:

🔄Patient Recruitment Updates

DXB flagged cash outflows of $7.2M, leaving the company with a cash balance of $9.6M.

We’re mindful that clinical trials are expensive to get up and running and the start up costs represent the largest chunk of clinical trial costs, so we’re expecting the cash outflows to be significantly reduced next quarter.

We were glad to hear DXB reiterate that it is on track for the first interim analysis for the FSGS trial, which will be released in the first half of 2023.

Promising results from DXB’s R&D pipeline

ASX:DXB Jul 04, 2022

Investment Memo: DXB IM-2022

Our 2021 Biotech Pick of the Year Dimerix (ASX:DXB) today announced promising results from a preclinical study on DMX-700, an early-stage oral treatment for a life-threatening lung disease - COPD (Chronic Obstructive Pulmonary Disease).

Note that this technology is different to the treatment used in Phase III clinical trial FSGS - our “Main Bet”.

The results showed that DMX-700 provided an 80% reduction in induced lung injury in mice compared to a control group - a statistically significant amount to progress to a clinical trial.

Although this news does not fit into the current objectives we set for our DXB Investment, we think that it adds value to the story, in particular as an extra ‘shot on goal’ targeting a big and important market.

COPD is the third leading cause of death worldwide, and the global market for COPD is valued at US$17B.

There is a significant unmet need for COPD treatment and given the severity of the disease, the FDA in 2018 issued revised guidance to accelerate clinical trials.

We are looking forward to tracking the progress of DMX-700 through to clinical trials and are paying attention to regulatory applications and approvals.

Today’s announcement showcases DXB’s ability to maintain and progress a healthy R&D pipeline - an important part of any biotech smallcap.

Side Bet #2: Covid-19 trial recruitment closed, results soon.

ASX:DXB Jun 28, 2022 Announcement

Investment Memo: DXB 2022

Objective #3: Complete Phase III Clinical Trial to treat pneumonia in patients with COVID-19 (REMAP CAP)

Yesterday our 2021 Biotech Pick of the Year Dimerix (ASX:DXB) announced that recruitment for one of its two Phase III COVID-19 trials (Side Bets) is now closed.

In February, recruitment for critically ill patients in this particular Side Bet was paused due to safety complications unrelated to DXB’s treatment. Recruitment has now officially closed.

The efficacy results will be analysed and published soon, however we don’t expect that to be enough patients in the trial to warrant commercialisation based on the results.

That said, these results will add to a growing body of evidence to support DXB’s lead treatment “DMX-200” capacity to reduce inflammation, and may lead to better targeted clinical trials for patients with pneumonia in the future.

For DXB, this investigator-led study was a ‘free swing’ with the majority of the study funded by a $1M government grant from last year.

DXB still has one more active Phase III study for COVID-19, targeting patients with mild COVID, while the main prize is the Phase III FSGS clinical for a rare kidney disease trial that is currently underway.

What’s next for DXB?: We are awaiting patient recruitment updates for DXB’s FSGS trial, with the key number being 72 patients recruited by the end of this year.

DXB presenting at a US biotech conference in California.

ASX:DXB Jun 06, 2022 Announcement

Investment Memo: DXB 2022

General: Investor Presentation

This morning our 2021 Biotech Pick of the Year, Dimerix Ltd (ASX: DXB) put out an updated investor presentation and confirmed that CEO & Managing Director, Dr Nina Webster, will be presenting at the BIO International Convention in California.

BIO, who is running the conference, is the world’s largest advocacy association representing member companies, state biotechnology groups, academic and research institutions, and related organisations across the United States and in 30+ countries.

The convention in the US attracts more than 15,000 biotechnology and pharma leaders for one week of intensive networking to discover new opportunities and promising partnerships.

We are hoping the presentations will put DXB on the radar of US investors who might be interested in the DXB’s Phase 3 FSGS trials.

First patient recruited in rare kidney disease Phase 3 trial

ASX:DXB May 31, 2022 Announcement

Our biotech investment, Dimerix Limited (ASX: DXB), has recruited the first patient to its DMX-200 ACTION3 phase 3 clinical trial in patients with FSGS kidney disease.

ACTION3 is a pivotal (Phase 3), multicentre, randomised, double-blind, placebo-controlled trial of the efficacy and safety of DMX-200 in patients with FSGS (Focal segmental glomerulosclerosis) who are receiving a stable dose of an angiotensin II receptor blocker (ARB).

That’s a lot to take in, but this is a significant moment for DXB - Phase 3 is actually happening and a lot of groundwork had to be laid for DXB to get to this point.

The trial will recruit across 75 sites in 12 different countries globally, with ethics and regulatory submissions now made in all 12 countries and those with approvals proactively screening for suitable patients.

Part 1 of the trial will conclude after the first interim analysis, once 72 patients have completed 35 weeks treatment — expected in the first half of 2023 (subject to recruitment).

This dosing and the ethics and regulatory submissions support our #1 Objective for DXB this year: to progress these Phase 3 trials.

What’s next?

We’re looking for further recruitment updates and word that all sites for the study are fully set up.

FDA IND Approval for Phase 3 Study of DMX-200 in FSGS

ASX:DXB May 09, 2022 Announcement

Our Phase III biotech Investment, Dimerix (ASX:DXB) secured approvals in another important jurisdiction for its clinical trial.

The company got FDA approval to conduct its ACTION3 study under the Investigational New Drug (IND) regime in the US.

This directly advances Key Objective #1 in our DXB investment:

The significance for us as investors is that DXB now has a clear run at proving its treatment for a nasty kidney disease (FSGS) is both effective and safe.

This was the last jurisdiction we were waiting for, and DXB now has approval in 12 countries and has 19 of 75 sites located in the US - a key market for DXB.

There are roughly ~80,500 FSGS patients in the US currently, and the addressable market globally comes to around $1B.

DXB remains well funded with ~$16.8 as at 30 March 2022.

We anticipate the first patient to be dosed soon, the next milestone on the way towards interim results analysis slated for H1 2023.

FSGS remains our “Main Bet” for DXB and we’re looking forward to that interim analysis, which we think may be an opportunity for a major share price re-rate.

What’s next for DXB? We’re looking for the first patient to be dosed and full recruitment for the FSGS trial.

Here is why we invested in DXB (our Biotech Pick of the year for 2021) and what we expect them to achieve in 2022 - DXB Investment Memo.

$3.7M R&D tax incentive rebate received

ASX:DXB Mar 29, 2022 Announcement

This morning, our biotech investment DXB confirmed it had received $3.7M through a R&D tax incentive rebate for FY21.

This comes in addition to the already healthy cash balance of $16.2M that the $55 million-capped DXB had in the bank as of 31 December 2021.

Having this much cash means that the company won’t have to worry about trying to raise capital and can instead focus on the Phase III clinical trial for its FSGS product (a rare Kidney Disease). The trial is currently in the patient recruitment stage.

The primary reason that we hold DXB in our portfolio is to see it develop its FSGS product so we are looking forward to more updates regarding the phase III clinical trials throughout this year.

Together with the announcement regarding the rebate, DXB also launched an updated investor presentation which provides a useful snapshot of where DXB is at with its various products:

To see all of the reasons we continue to hold DXB in our portfolio, what we want to see the company achieve in 2022 and the key risks to our investment thesis, check out our 2022 DXB Investment Memo here.